I must admit I was a bit stunned when I read the headline for this article in Total Telecoms.
So where are the ‘fresh revenues’ going to come from?
The article points out that, to date, mobile video calling has failed to achieve widespread popularity “…for a number of reasons, including doubts over quality, prohibitive costs to the user, incompatible devices and a perception that consumers aren’t interested in it.”
But Leslie Ferry, vp of marketing for IMS vendor Broadsoft, claims that Skype’s success shows “there is such a demand in the market for these services.”
Perhaps there is demand because Skype has overcome the negatives listed above…
- Skype’s drive to provide the highest quality over packet networks is admirable.
- Certainly one can’t beat Skype’s price point – free.
- Given Skype is available on the iPhone and Android 2.2, plus RIM and Nokia, plus every PC platform available, I think it’s fair to say they have overcome device compatibility.
- Consumer interest… that’s a tough one, but making it free, available everywhere and with good quality should spur whatever demand there is.
I struggle with how mobile service providers are going to be able to compete with the likes of Skype and Facetime, both of which seem to have an insurmountable lead today, even with Broadsoft’s undoubtedly advanced IMS-based video calling solution.
In a world where billable minutes of use is (was) king, the fact that competitive video calling services are priced at zero (even less than regular cellular calls), will make it difficult to charge anything, let alone a premium.
Even in the brave new world of bits, bytes and data, where services are just packets flying over the network, I think it will be difficult for operators to actually construct a viable video-calling business. If the bar is set at $0.00/minute for video calls between clients on the IP network, is this a loss leader?
Are mobile operators planning to invest tens of millions of real dollars to develop a video calling service they are going to (be forced to) give away?
Undaunted, Ms. Ferry goes on to say “In any market there are always going to be new entrants” and while mobile operators can take advantage of their broad base of subscribers, “over the top guys have to start from scratch.”
With Skype pushing 700m registered users, nearly $1 billion in revenues, and ~40% of minutes (calls) include video, it seems to me that Skype’s been scratching along for quite some time.